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Optimizing Tax Write-Off Opportunities

Don't overlook valuable tax write-off opportunities this season.

With tax season just around the corner, many companies are looking for creative ways to write off more expenses to combat the uncertain economic climate. Some recent changes to the tax code, however, have made filling out the forms for IRS submission more complex than usual, forcing many accounting departments to spend more time on proper documentation and accuracy, and less on lucrative write-offs.

How could you benefit from more tax write-offs? Are you aware of what options are available when filling out the tax forms?

Write-Off Trends 
Hispanic Business discussed a few ways businesses are getting resourceful with their taxes this year, focusing on little-known write-offs that help save money that can be allocated elsewhere in the company.

Richard Butler, a professor of accounting at York College, told Hispanic Business that most taxpayers appear to be using standard deductions this year, rather than itemized deductions. Standard deduction is based on marital status and individual family circumstances, whereas itemized deductions can include expenses such as mortgage rate interest and real estate tax deductions.

There are some deductions many filers may have overlooked, however, that should be included this year. Rob Gratalo, CPA with Reinsel Kuntz Lesher accounting firm, told the source some itemized deductions must exceed predetermined limits for eligibility. Non-reimbursed employee business expenses, for example, must surpass 2 percent of gross adjusted income to be of value when filing.

Home Office Deduction
With companies equipping workers with access to information and communications in the cloud more readily, there has been an increase in employees functioning out of remote locations and home offices. Because a mobile workforce offers significant cost, flexibility and accessibility benefits to a company, telecommuting is becoming more commonplace. Working from home can also offer individual employees an opportunity for a tax deduction when properly documented.

Richard Eisenberg explained in a piece for Forbes many workers are fearful of writing off a home office in case it will trigger an audit from the IRS. However, the growing number of mobile professionals in the country is making these claims less suspicious to the federal government, creating more write-off opportunities for professionals.

To qualify for a home office write-off, Eisenberg outlines some rules in place to keep filers in check. To transform normally nondeductible personal expenses into write-offs for a home office, be sure to file the 43 line Form 8829 Expenses for Business Use of Your Home section and explain certain costs are exclusively for professional use and are paid out on a regular basis. This demonstrates certain space, resources or services are used only for business purposes in the home, and these costs are regular and ongoing to maintain operations. Without this explained, it is unclear to the IRS how much has been invested in creating a workspace in the home and what should be legitimately reimbursed.

Furthermore, a home office write-off can apply to expenses paid to conduct business outside a standard office in another location. A startup company may have limited office space or resources to support staff, and may benefit from having workers function remotely. Conducting business-critical tasks on the road can qualify as a tax write-off when the employer is benefiting from the arrangement as well. Be sure to take a photo of any remote workspace being filed as a deduction to prepare for a potential IRS audit and keep track of locations used in the event of a move, the source reported.

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